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AI Stocks Jump on $500B Stargate Announcement, Microsoft Loses Out

Published
James Morales
Published
By James Morales
Edited by Insha Zia

Key Takeaways

  • OpenAI, Oracle, and Softbank plan to form a new joint venture, Stargate, announced by Donald Trump on Tuesday.
  • Stargate will invest $500 billion over the next four years in building new data centers in the U.S.
  • While the announcement buoyed many AI stocks, Microsoft’s share price declined.

On Tuesday, Jan. 21, Donald Trump, joined by the leaders of OpenAI, Oracle, and Softbank, announced a new joint venture between the three companies that will invest $500 billion in American AI infrastructure.

Following the news, shares in Softbank and Oracle jumped by around nine percent each, buoying other AI stocks simultaneously. Seemingly, the only loser in the deal is Microsoft, which will lose its exclusive cloud contract with OpenAI.

What is Stargate?

Over the next four years, Stargate is expected to spend half a trillion dollars building AI data centers in the U.S.

At Tuesday’s briefing, Oracle CTO Larry Ellison said ten data centers were already under construction in Texas, with more planned across the country.

Trump positioned the new investment as a corollary to his ambitious energy agenda, which will “produce a lot of electricity” to cement American AI supremacy. Meanwhile, he claimed the initiative would create over 100,000 jobs “almost immediately.”

Softbank CEO Masayoshi Son attributed his firm’s investment to Trump’s election victory, stating, “We wouldn’t have decided to do this unless you won.”

Meanwhile, Altman said Stargate will be “the most important project of this era,” adding that he was “thrilled” with OpenAI’s involvement.

According to a person familiar with the deal cited by Reuters , Stargate will have a separate board appointed by the founding members and its own CEO. The venture will also reportedly welcome other investors, including the Emirati firm MGX.

Markets Respond to Stargate Announcement

Although Oracle and Softbank have been the most obvious beneficiaries of the Stargate announcement, other stocks that signal investor confidence in AI clocked more modest gains.

Nvidia and Amazon saw their share price jump by more than two percent. Google, TSMC, Samsung, and Palantir also registered notable stock market gains.

On the other hand, Microsoft stock is in the red following the news that OpenAI will no longer be tied into an exclusive cloud contract with the firm.

Microsoft Relinquishes Exclusive Arrangement

After it invested $1 billion in the startup in 2019, Microsoft previously held the right to be OpenAI’s exclusive cloud provider.

However, in a statement  on Tuesday, the firm confirmed that it had approved changes to the agreement that will let the OpenAI build additional capacity, enabling its involvement in Stargate.

“We are thrilled to continue our strategic partnership with OpenAI and to partner on Stargate,” Microsoft said. However, markets appear to have interpreted the deal as a loss for the Big Tech firm.

Are Microsoft and OpenAI Drifting Apart?

The termination of Microsoft’s exclusive cloud contract with OpenAI raises questions about the future of their partnership. While Microsoft’s official statement emphasizes continued collaboration, the end of exclusivity could indicate a shift in dynamics.

OpenAI’s decision to diversify its cloud infrastructure suggests a need for greater independence as it scales operations. It could also signal a strategic pivot toward broader alliances with other tech giants.

Microsoft retains exclusive access to OpenAI’s AI models. But that arrangement is subject to a 2030 cutoff. After that, OpenAI may opt to go it alone.

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James Morales

Although his background is in crypto and FinTech news, these days, James likes to roam across CCN’s editorial breadth, focusing mostly on digital technology. Having always been fascinated by the latest innovations, he uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
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